{"id":485,"date":"2021-03-17T21:00:00","date_gmt":"2021-03-17T13:00:00","guid":{"rendered":"http:\/\/3.68.57.190\/?p=485"},"modified":"2025-09-29T17:28:46","modified_gmt":"2025-09-29T09:28:46","slug":"facebook-stock-undervalued-options","status":"publish","type":"post","link":"https:\/\/slashtraders.com\/en\/blog\/facebook-stock-undervalued-options\/","title":{"rendered":"Facebook Stock Undervalued? Trade FB Like This for Best Returns"},"content":{"rendered":"

Can you imagine how profitable Facebook is?<\/p>\n\n\n\n

Do you know FB is severely undervalued right now?<\/p>\n\n\n\n

SlashTraders will show you how to maximise investment returns with options after FB stock has bottomed out<\/a>.<\/p>\n\n\n<\/p>\n\n\n\n

Why Invest In Facebook Stocks?<\/h2>\n\n\n\n

Facebook<\/a> is the world's biggest social media platform, with more than 2.8 billion monthly active users. Together with Google<\/a>, Facebook is one of the top 2 advertising platforms in the world.<\/p>\n\n\n\n

Facebook's advertising revenue has been growing steadily<\/a> since 2009, and it reached nearly $84.2 billion in 2020. Facebook is a money-making machine.<\/p>\n\n\n<\/p>\n\n\n\n

\"\"
Facebook ad revenue has been steadily increasing.<\/figcaption><\/figure>\n\n\n

<\/p>\n\n\n\n

What Is the Fair Value of Facebook Stock?<\/h2>\n\n\n\n

TD Ameritrade's<\/a> Analyze Fundamentals tab provides the quickest way to find the fair value of FB, by checking the Trefis estimate<\/a>.<\/p>\n\n\n\n

Facebook's fair value is 23% higher than the current market value of $260.<\/p>\n\n\n\n

\"FB
Facebook's fair value is 23% higher than the current market value of $260.<\/figcaption><\/figure>\n\n\n\n

Take a closer look at Trefis' analysis of FB, we can see 94.3% of Facebook's value is from ad revenue. Given the Gross Margin of advertising is 86.7%, we can see Facebook is tremendously profitable.<\/p>\n\n\n\n

\"Facebook
Facebook's Gross Margin is extremely high at 86.7%.<\/figcaption><\/figure>\n\n\n\n

So Facebook and other FAANG stocks like, Apple<\/a>, Google<\/a>, Netflix<\/a>, Amazon, have outstanding competitive edge and are the corner stones of S&P 500 index<\/a>.<\/p>\n\n\n\n

\"slashtraders<\/a><\/figure>\n\n\n\n

How to Use Options to Leverage a High Return on FB<\/h2>\n\n\n\n

While Facebook's stock price has been heavily undervalued by 23%, it is still a very profitable company with more than 86% Gross Margin. We believe META's stock price will continue to go up and up in the future.<\/p>\n\n\n\n

Facebook stock price has recently dropped<\/a> to close to 200-day Moving Average. From last year's price trends, FB stock always rebounded before crossing the 200-day MA, so there is a high probability META will go up again.<\/p>\n\n\n<\/p>\n\n\n\n

\"facebook
FB stock price would either rebound at 100 or 200 day moving averages.<\/figcaption><\/figure>\n\n\n

<\/p>\n\n\n\n

If we buy Facebook stocks to anticipate the price to rise, we and expect 23% return according to Trefis.<\/p>\n\n\n\n

A good way to increase leverage is to trade options instead. We can buy a Call option close to the current market price, and receive a huge profit when the stock price go past the strike price.<\/p>\n\n\n\n

Since FB is $260 right now, we can buy a Call at $265, and sell a 255\/260 Put Spread<\/a> to reduce the cost of the long Call.<\/p>\n\n\n<\/p>\n\n\n\n

\"long
Buy a Call while selling a Put Spread to reduce the cost of the Call option for Facebook.<\/figcaption><\/figure>\n\n\n

<\/p>\n\n\n\n

This trade would cost us $560.<\/p>\n\n\n\n

Trading Facebook Options in TD Ameritrade<\/h2>\n\n\n\n

In the Trade tab, we browse to the FB options that expire next month.<\/p>\n\n\n\n